Pricing and Return Strategy Selection of Online Retailers Considering Consumer Purchasing Behavior

Abstract

This article mainly considers the coexistence of physical sales channels and online sales channels. Online retailers with online sales channels consider whether to provide return policies and whether to provide consumers with return insurance. The research established four return strategy models that: do not provide returns; provide returns but do not provide return insurance; provide return insurance, but the cost is borne by online retailers; and provide return insurance, but the cost is borne by consumers. The authors then studied the online retailers’ optimal return and shipping insurance selection strategies. The results show that when the proportion of residual return value after the value reduction of unit returned products was large, online retailers set higher sales prices and provided return policies, while offline retailers needed to reduce sales prices in order to attract more consumers. When the consumer unit product return compensation was relatively large, online retailers chose to provide consumers with free return insurance; otherwise, it was more beneficial for online retailers not to provide return insurance. Further research found that although the cost of online retailers increased when freight insurance was taken, it could better attract consumers, which was more beneficial to online retailers.